TAX UPDATE

Tennessee Information Request
On June 13, 2008, the Department of Revenue mailed out a request for information from all family-owned noncorporate entities (FONCE).  If you are the contact person for a FONCE, you should fill out and return the form by July 18, 2008.  Failure to return the form may result in loss of your tax exempt status, if applicable. 

Status of Federal Tax Legislation
The Technical Corrections Act of 2007 still has not been enacted.  This legislation was referred to in our last update.  The legislation allows for revised and expanded opportunities for gifting of IRA proceeds.  Additionally, it contains a key provision relating to charitable contributions made by subchapter S corporations.  Under a law that expired in 2007, subchapter S shareholders were allowed to reduce their stock basis only by their share of the tax basis of appreciated property given to charity.  Until this law is finally enacted, shareholders are forced to reduce their basis by the full value of the property given.  It is important that subchapter S corporations contemplating gifts of appreciated property (especially land and conservation easements) monitor the status of this legislation.  It may be advantageous to delay any such gifts until enactment.

The usual set of expiring provision extenders and alternative minimum tax patches is winding its way through Congress and we will keep you informed of the status of this legislation.